Rise in COVID-19 cases spurs risk-off move, dollar lifted

NEW YORK (Reuters) – The safe-haven U.S. greenback rose modestly on Thursday afternoon as worries about rising numbers of coronavirus infections spurred a broader risk-off transfer, pushing U.S. equities decrease.

One other leap in coronavirus infections has compelled California and different states to close down once more, elevating fears the U.S. economic system and labor market will proceed to endure.

Retail gross sales in June elevated for the second consecutive month, in response to a report from the Commerce Division. However the resurgence in new COVID-19 instances is chipping on the budding restoration, protecting 32 million Individuals on unemployment advantages, in response to a separate report from the Labor Division on Thursday.

The U.S. greenback index =USD, which measures the foreign money in opposition to a basket of six rivals, was final up 0.35% at 96.350.

The three main U.S. inventory indexes had been all within the purple on the day, with the S&P 500 index .SPX final down 0.42%.

“The info generally was fairly constructive on U.S. retail gross sales. I believe nonetheless that for international alternate, issues haven’t actually modified,” mentioned Mazen Issa, senior international alternate strategist at TD Securities.

That’s, he defined, as a result of because the backside within the inventory market on March 23, international alternate markets have been extremely correlated with equities.

“The info in and of itself hasn’t been a focus for foreign money markets, it has actually been about threat asset efficiency. And that has been motivated by the notion that as poor as the information could also be in future months, that you’ve a fiscal and financial backstop. There may be a variety of religion being positioned in central banks and the collapse in foreign exchange volatility has been reflective of that.”

The euro was barely softer in afternoon commerce, final buying and selling down 0.28% at $1.138 EUR= forward of an EU summit starting Friday, at which European nations are anticipated to vote on a 750 billion euro ($856 billion) restoration fund to revive development within the bloc.

Even when the financing bundle the EU agrees on is smaller than what’s presently on the negotiating desk, analysts mentioned the greenback could however proceed to weaken in opposition to the euro.

“Whereas (Europe has) had their troubles, they’re in a significantly better place to rebound than the US. And I don’t imply fairness markets, I imply the actual economic system. And that’s another excuse it’s justified that the greenback is weakening general,” mentioned John Doyle, vp of dealing and buying and selling at Tempus Inc.